FDIC Proposes Major Overhaul of Bank Merger Review Process
FDIC issued a proposal to reform its bank merger review process with new criteria and timelines.
Why it matters: Legal and compliance teams in banking must adapt to revised FDIC expectations that streamline merger approvals and add new competition metrics.
- On September 17, 2026, FDIC Board approved a proposed rule to modernize bank merger reviews.
- The proposal introduces a 'deemed approval' for 'de minimis merger transactions,' allowing auto-approval in 5 business days if no U.S. Attorney General objection.
- It updates the competitive effects screen to include credit union shares and centrally booked deposits alongside bank deposits.
- The rule establishes a competition safe harbor for mergers with HHI of 1,800 or less or HHI increases under 200 points.
The FDIC Board of Directors approved on September 17, 2026, a notice of proposed rulemaking aimed at modernizing and reforming the regulatory framework for reviewing bank merger transactions under the Bank Merger Act.
The centerpiece is a new 'deemed approval' process for what the FDIC calls 'de minimis merger transactions.' If qualifying transactions face no objection from the U.S. Attorney General, they can be approved automatically within five business days, significantly accelerating the timeline compared to current practices.
In updating competitive analysis, the FDIC’s proposed rule revises the initial Herfindahl–Hirschman Index (HHI) screen to factor in credit union shares and centrally booked deposits, along with traditional bank and thrift deposits. This adjustment offers a more comprehensive assessment of market concentration.
The rule also introduces a competition safe harbor: merger transactions resulting in an HHI of 1,800 or less, or where the HHI increases by fewer than 200 points, will be presumed to raise no significant competitive concerns, potentially simplifying the review process.
Additionally, the proposed rule tailors filing requirements and processing timelines according to the size, risk profile, and characteristics of the institutions involved. It also clarifies the FDIC’s discretion regarding removing applications from expedited processing to provide greater predictability.
According to the FDIC Board, these reforms will "substantially and meaningfully reduce regulatory burden" and make merger reviews "faster, more predictable, and appropriately tailored" to the risks involved.
For legal and compliance teams advising bank mergers, this proposal signals significant changes to filing strategies and regulatory expectations once finalized.
By the numbers:
- September 17, 2026 — date of FDIC Board approval of proposed rulemaking
- 5 business days — timeframe for 'de minimis' merger auto-approval under the new process
- 1,800 — HHI threshold for competition safe harbor
- 200 points — maximum HHI increase allowed for competition safe harbor